Public procurement system challenges in …

1 International Journal of Economics, Finance and Management Sciences 2013; 1(2): 119-127. Published online April 2, 2013 ( ). doi: Public procurement system challenges in developing countries: the case of Zimbabwe Michael Musanzikwa Lecturer at Chinhoyi University in the Department of Supply Chain Management Email address: (M. Musanzikwa). To cite this article: Michael Musanzikwa. Public procurement system challenges in developing Countries: the Case of Zimbabwe, International Journal of Economics, Finance and Management Sciences. Vol. 1, No. 2, 2013, pp. 119-127. doi: Abstract: Purpose: The purpose of this paper is to provide an overview of the Public procurement system challenges in developing countries with reference to Zimbabwe, addressing the extent to which the procurement systems have resulted in disgruntlement by pressure groups like the Affirmative Action Group (AAG) and the Upfumi Kuvadiki over the awarding of tenders to foreign owned companies.

2 Design/Methodology/Approach: The study adopted a qualitative research design because it provided flexibility and afforded the researcher the opportunity to conduct an in-depth research. Case studies on major government projects such as the supply of prepaid meters for the Zimbabwe Electricity Supply Authority (ZESA), the construction of the airport road in Harare and the expansion of Gokwe District Hospital were conducted. Findings: The findings suggest that most of the people tasked with the responsibility to procure resources are incompetent. For example the tender to supply ZESA with prepaid meters was flawed since it was the State procurement adjudicators who were at fault. There was evidence of inadequate market enquiry in the awarding of most tenders, for example the City of Harare lost $80 million dollars in the construction of a 20km road instead of incurring a cost of around $10 million dollars. Delays in decision making resulted in the construction of a $600 district hospital in Gokwe North lagging behind schedule.

3 There was also evidence of a high level of corruption activities in the Public procurement . In 2011 a tender for the supply and delivery of malaria rapid test kits was withdrawn with participating bidders being refunded their tender fees because it had been corruptly flouted. Research limitations/implications: The main limitation of the study lies with a lack of complex analysis undertaken to support the findings. Practical Implications: The findings from the study suggest that professional procurement practices must be adopted in Public institutions for the benefit of the country. Social Implications: Govern- ments across the world pay lip service when it comes to implementing Government projects. As a result the Public suffer due to poor service delivery. Originality/Value: The paper is original as it is the first attempt to discuss the Public procure- ment system challenges in developing countries with reference to Zimbabwe as to how it has caused disgruntlement among the pressure groups on the awarding of tenders.

4 Keywords: Public procurement system , Purchasing, Sourcing pansion of Gokwe District Hospital. The enactment of the 1. Introduction Indigenization Act has also complicated the procurement This research analysed challenges in Public procurement process and locally owned companies are supposed to be in Zimbabwe. procurement function is vital to any organi- given priority. Therefore, Public procurement in Zimbabwe zation and procurement strategies have become part of a is froth with a myriad of challenges which need to be ad- business's success than ever before. Despite the importance dressed. This study was motivated by desire to come up of the procurement function, their process has been a sub- with feasible recommendations to the challenges being ject of controversy in recent years. Since 2009, there have faced. been a number of debates on the handling of government tenders. Almost every major government project has gener- 2.

5 Research Objective ated controversy and such projects include construction of airport road in Harare, Zimbabwe Electricity Supply Au- The researcher sought to attain a number of objectives. thority's (ZESA) prepaid meter supply project, and the ex- These were;. To assess the role of procurement in the success of 120 Michael Musanzikwa: Public procurement system challenges in developing countries: the case of Zimbabwe organizations optimum value. procurement works like a pivot in the in- To analyse procurement procedures in Public insti- ternal supply chain process turning around requests into tutions in Zimbabwe actual products/commodities or services to fulfil the needs To identify challenges to procurement in the Public (Caldwell, Roehrich and Davies, 2009). Caldwell et al, sector (2009) further argue that procurement serves three levels of To come up with strategies for improving Public users and these are the internal customer, programs in re- procurement function sponse to emergencies and ongoing programs, and preposi- tioning of stocks, for both internal customers and program 3.

6 Literature Review needs. In addition, Benslimane, Plaisent, and Bernard (2005). Definition of Key Terms contend that the overal aim and objective of procurement is to carry out activities related to procurement in such a way procurement : that the goods and services so procured are of the right It is a process of identifying and obtaining goods and quality, from the right source, are at the right cost and can services. It includes sourcing, purchasing and covers all be delivered in the right quantities, to the right place, at the activities from identifying potential suppliers through to right time. There are six rights' in procurement and they delivery from supplier to the users or beneficiary. It is fa- can be achieved through following specific objectives of vourable that the goods/services are appropriate and that procurement (Benslimane et al, 2005). These specific ob- they are procured at the best possible cost to meet the needs jectives are.

7 Of the purchaser in terms of quality and quantity, time, and To buy quality materials, items and services eco- location (Mangan, Lawani, and Butcher, 2008). nomically from reliable sources;. Public procurement system : the process in which pub- To ensure timely delivery through the selection of lic sector institutions acquire goods and services. Public capable and efficient suppliers;. procurement systems are highly centralized and State Pro- To continuously locate, evaluate and develop eco- curement Boards govern procurement (Bovis, 2007) nomical and reliable supply sources;. Purchasing: The specific function associated with the To identify the most reliable sources of supply actual buying of goods and services from suppliers (Man- through either open tender, multi-stage tendering gan et al, 2008) (pre-qualifying suppliers and retaining only those Sourcing: It refers to process of identifying and working that are capable of meeting the organisation's re- with appropriate suppliers (Mangan et al, 2008) quirements; strategic sourcing) and limited tender- Theoretical Framework ing.

8 To investigate the availability of new materials and The researcher believes that, due to dynamism of the en- monitor trends in market prices;. vironment, there is a need to continuously improve pro- To buy in accordance with organisations policies;. curement in the Public sector. Accordingly, this study ap- Moreover, Caldwell et al (2009) say that there are three plies the Kaizen Continuous Improvement model that was important principles of procurement . The first principle is popularised by Maurer (2004). Maurer (2004) argues that transparency, which provides that all phases in the pro- there is one important question to ask when dealing with curement process are fair and accurately documented. The procurement . The question is; How is the organisation second principle is that of accountability and it points out seeking continuous improvement in its approach to pro- that there is need for accountability to financiers, who may curement for new development, planned and responsive require certain rules to be followed when using the money maintenance?

9 To ensure improvement in procurement , they have provided. Finally, there is the principle of effi- Maurer (2004) prescribes that organisations should use ciency and cost effectiveness and this principle is about best value' techniques, which embody aspects such as meeting the six rights' of supply (price, right time, right challenging what organisations do and how they do it, mak- quantity, quality services, and delivery to the required plac- ing comparisons with others, consulting people affected by es and from the most cost effective source). the organisation's services, and establishing that value for procurement has an important role to play and according money is obtained during procurement . to Shaw (2010), every organisation should put in place ef- fective systems of procurement to protect shareholders Role of procurement funds. The procurement function forms a key part of any Lewis and Roehrich (2009) agitate that procurement is a management strategy.

10 The particular features of procure- key activity in the supply chain. procurement can signifi- ment are the budgets involved, the frequency of activities cantly influence the overall success of an emergency re- and technical complexity of the functions. More recently as sponse depending on how it is managed. In most organisa- a function procurement has been complicated by the inclu- tions, procurement represents a very large proportion of the sion of manufacturing partnering' and by the acceptance total spend and should be managed effectively to achieve that best value cannot be measured by price alone, but needs to take account of time, quality and sustainability International Journal of Economics, Finance and Management Sciences 2013, 1(2): 119-127 121. considerations as well (Shaw, 2010). organisation's immediate and future requirements for goods procurement activity must, therefore, be considered as an and services. The sourcing process adopted will depend on internal part of the business planning process and must the situation and on the time available to carry out sourcing.